Belarus Pension System Needs an Unpopular Reform

8 June 2012

In his annual address Lukashenka outlined the essence of his relationship with the official unions. Stalin would call the official Belarus trade unions driving belts of his policies. But the form of expression does not change the reality -...

In his annual address Lukashenka outlined the essence of his relationship with the official unions. Stalin would call the official Belarus trade unions driving belts of his policies. But the form of expression does not change the reality – in Belarus, the so-called trade unions constitute a specific substructure of the state apparatus.

Lukashenka, as the official press is not particularly sensitive to political niceties, proudly reported that the Chairman Leanid Kozik of the Federation of Trade Unions of Belarus performs his orders in the organisation entrusted to him. Therefore, all ideological, political and practical impact by the official trade unions should be considered to be an adapted version of higher-up state policy. Pension reform is just one example of it.

Sometimes these ideas are presented almost as a result of discussions between trade union bosses and employers. In particular, last October Deputy Prime Minister Anatoly Tozik spoke in favour of a pension reform: "I can personally express my opinion. I think that we should think about raising the retirement age, so that people would be interested in retiring later, because the pension would be much higher. "

Interestingly, the deputy prime minister spoke a month later his original statement at a meeting with Lukashenka and stated that the retirement age would not increase.

This looks like a democratic pluralism. The president with the trade unions clashed in the loop of outright populism, and the government is concerned about the real state of affairs. After all, Belarusian society faces real problems in light of its aging, shrinking population, and declining birth rates. The number of elderly grows, that is to say people collecting pensions, at the expense of a reduction in the proportion of working-age population.

Belarusian Population is Declining and Aging

Perhaps for these reasons, Anatoly Tozik spoke about the urgent reform of the pension system – the country already has 2.5 million pensioners and 4.5 million working people, and this proportion will only get worse.

The active nature of the demographic and social policy of Belarusian authorities is constantly emphasised by state propaganda. On the eve of the most important political campaigns they somehow always seem to manage to find many positives. In reality this policy does not offer solutions but rather represents the inadequate attempts to mitigate the negative effects of the real demographic and social processes.

Several years ago, when those born in the mid 1980s reached reproductive age many began to talk about the baby-boom. And now officials express concern about the low numbers of students and pupils in schools. Just one year ago there was a surplus. Similar to the demographic statistics, the process of developing a rather unpretentious.

A natural decline in population because of the excess of deaths over births continues to this day for the nineteenth year in a row.

The Government Needs to Reform

Those currently working will have to be supported by today's youth, whose numbers have been steadily declining.Read more

Something must really be done, because the content of the growing army of retirees is daunting for workers. In the pension system of Belarus, current pension contributions go to the current pensioners. Those currently working will have to be supported by today's youth, whose numbers have been steadily declining. Today men in Belarus retire at 60 and women at 55.

The need to increase the retirement becomes evident. Most democratic states take measures to alleviate this problem. Of course, such measures are unpopular, and they are introduced very slowly. For example, increasing the retirement age takes place over a long period of time and increases for several months a year. In particular, this has been done in Poland and Latvia.

The fewer people retire, the more people work, the higher are the pensions in the long-run. But at any given moment popular dissatisfaction with the reform can rise to dizzying heights. If democratic procedures actually work and the political elite is changing, these reforms are more likely to be implemented. If the procedures do not work, as in Belarus, the government can not dare openly undertake such unpopular measures.

Therefore, the "fiscal intentions" are clothed in verbal husks and are implemented in a rather contradictory way. A good example is Decree No 136 "On measures to improve pensions to citizens" which established a scheme promoting late retirement. It is likely that the documents would be of considerable interest of pensioners, who are able and willing to continue working. They can abandon their pension and continue to work for five years, so that to get a much higher pension later.

The Gender Gap

Obviously, the decree is addressed primarily to women who have a greater life expectancy. Those who agree to play by the new rules, in fact, will retire when they reach the age of 60. If the experiment is successful, it will be extended to other categories.

about two fifths of all the men we did not reach the age of 60. They are NOT using the pension system, but funding it in the course of their entire working lifeRead more

This is the logic. However, it should be noted that about two fifths of all the men did not reach the age of 60. They are NOT using the pension system, but funding it in the course of their entire working life. Our state does not have a very delicate attitude to individual life, but here we are talking about reversing people’s pockets. Thus, simply increasing the retirement age can not be a problem to solve. In many ways, this measure can be considered the abolition of the pension system at all.

Second, everyone knows that after one reaches 40 it is very difficult to find a job in Belarus in accordance with one’s profession, and after 50 – it is nearly impossible. Although the legislation prohibits age discrimination, nearly all employment ads contain age restrictions. Even those which the public employment agencies disseminate.

Legal nihilism in Belarus beats the rule of law. For this reason, increasing the retirement age is associated with risk of increased long-term unemployment among the elderly.

Kanstantsin Skuratovich, the Agency of Political Expertise. This article originally appeared in Russian on Nashe Mnenie web site and is a part of a new collaborative arrangement with the Agency of Political Expertise.

The US Anti-Missile Defence Strengthens Lukashenka’s Position

On the eve of the recent visit of Vladimir Putin to Belarus, at least three important points of vulnerability of Russia's and Putin's position in relations with Belarus were revealed. First, the importance of a Belarusian foothold for Russia increases in light of the deployment of the US anti-missile defence sites on the territory of the eastern member states of NATO.

Second, for quite a long period of time, Ukraine will be the priority direction of Russia's foreign policy activities. Third, the Kremlin places primary responsibility for the failure of plans to speed up the creation of the Eurasian Union on the leaders of Kazakhstan; a certain cooling in relations between Russia and Kazakhstan is another reason for Moscow not to revive sensitive issues in its relations with Belarus.

Conflicts on the Issue of Anti-missile Defence

During his election campaign, Putin used to say that one of the major point of disagreement in relations with the West and the USA was the deployment of anti-missile defence sites throughout the territory of eastern member states of NATO.

On May 3 and 4, the international conference "The anti-missile defence factor in the formation of a new security space", organised by the Ministry of Defence of Russia, was held in Moscow. High-ranking military men from Belarus attended the conference together with representatives of fifty states (including twenty-eight member states of NATO).

Official representatives of Russia – former President Dmitry Medvedev, Secretary of the Security Council Nikolay Patrushev, Minister of Defense Anatoliy Serdyukov and Chief of General Staff Nikolay Makarov – voiced their view that the deployment of the anti-missile defence inevitably entailed retaliatory measures and created conditions for confrontation and a costly arms race.

already by 2020 the European line of the American anti-missile defence system would be able to intercept Russian missilesRead more

In particular, Patrushev said that already by 2020 the European line of the American anti-missile defence system would be able to intercept Russian missiles. According to General Makarov, the US military continues to rapidly improve the information processing capabilities and firepower of the system – they are increasing their range and the speed of interceptor missiles and improving their point accuracy. At the same time, the deployment sites are getting closer to Russia's borders.

A few days before the conference, some high-ranking military men pointed out that their Belarusian foothold would play an important role among their retaliatory measures.

The anti-aircraft missile system "S-400" , which is capable of intercepting the US interceptor missiles, could be deployed to Belarus.

It was also pointed out that Belarus was the best place to deploy the short-range "Iskander" missiles, designed to hit the anti-missile sites located in Poland.

Earlier, such declarations about the possibility of deployment of "Iskander" missiles over the Bug River were accompanied by claims of other high-ranking Russian military officials in mass media that Lukashenka was an inconsistent ally. This was why Russia would not transfer sophisticated offensive weapons, including the tactical "Iskander" missle system to Belarus.

In Moscow, they speak almost unanimously about the possibility of the deployment of an export-version of the tactical "Iskander-E" missile system in BelarusRead more

However, now in Moscow, they speak almost unanimously about the possibility of the deployment of the export-version of the tactical "Iskander-E" missile system in Belarus. In comparison with the systems "Iskander-M", with which Russian units are equipped, these systems have a two-times smaller range – about 200 km. However, it would be sufficient to threaten the anti-missile defence sites deployed in Poland.

Finally, a network of military airfields, which are capable to receive the Russian long-range bombers "Tu-22M3", is still exists in Belarus from the Soviet era. Their deployment in Belarus increases the efficiency of these bombers against the anti-missile defence sites, including against US Navy ships used for anti-missile defence.

The Ukraine Factor

Lukashenka's team also has reasons to believe that the main foreign policy issue for Putin's administration in 2012 will be Russia's relations with Ukraine. Russia will endeavour to prevent or, at least, complicate to the maximum possible extent Ukraine's movement (while quite a lengthy one) into the EU.

In April – May, Lukashenka's advisors had probably conveyed to him that ways of putting pressure on Ukraine were being discussed in Russia. In particular, the expert community discusses the figure of 20 billion dollars – this is the net worth which Ukraine estimates the value of its gas transportation system to be.

it is only the first round of arm-twisting towards Ukraine, who has turned out to be defiant and unappeasable even under Yanukovych, much to the indignation of the KremlinRead more

Ways to force Ukraine into significantly reducing this price are currently under discussion. And it is only the first round of arm-twisting towards Ukraine, who has turned out to be defiant and unappeasable even under Yanukovich, much to the indignation of the Kremlin.

Cooling of relations between Russia and Kazakhstan

May 25 marks the anniversary of signing of the treaty on friendship and cooperation between Russia and Kazakhstan. On the eve of Putin's inauguration, it was widely believed among Russian politicians and in expert community that Putin would make his first official visit to Kazakhstan.

However, it was announced on the eve of Putin's inauguration, which took place on May 7, that Putin would make his first official visit to Belarus on May 31. Even if Putin visits Kazakhstan on May 25, this visit would be informal, i.e. held in lower regard.

The bottom-line is that in order to create and sustain the threat of use of a Belarusian foothold, including against the anti-missile defence sites, Russia will not revive sensitive issues in its relations with Lukashenka's regime.